Natural Gas Storage Report - July 6

[dan_s]

Working gas in storage was 2,152 Bcf as of Friday, June 29, 2018, according to EIA estimates. This represents a net increase of 78 Bcf from the previous week. Stocks were 717 Bcf less than last year at this time and 493 Bcf below the five-year average of 2,645 Bcf. At 2,152 Bcf, total working gas is within the five-year historical range. < Very close to the bottom of the 5-year range and the U.S. gas market is MUCH LARGER than it was five years ago.

The build was larger than I expected, but just 5 Bcf above the 5-year average for this week. For the week ending July 6 the 5-year average build is 81 Bcf.

Since the end of April (nine weeks) the delta to the 5-year average has declined by a total of 27 Bcf or just 3 Bcf per week.

It will take a VERY MILD July across the eastern half of the U.S. to even come close to reducing the deficit to the 5-year average to 400 Bcf by the end of this month.

There are just 19 weeks remaining before the next winter heating season begins. 493 / 19 = 25.95
Is it likely that storage builds will exceed the 5-year average by 26 Bcf per week during the remaining refill season? I doubt it.

Conclusion: The Wall Street Gang does not focus on the "gassers" until after Labor Day. If natural gas in storage is 300 Bcf below the 5-year average in September (very likely), then I predict that the utilities will start bidding up the gas price because they must have secure supplies heading in the next winter. There is no doubt that we have a massive amount of natural gas in this country and supply is growing, but demand is also growing rapidly for industrial demand, power generation and for exports.

[dan_s]

In the last 52 weeks, the delta to the 5-year average is -721 Bcf. If this does not tell traders how strong demand for U.S. natural gas is, then I don't know what else will convince them.

By the end of 2020 the U.S. will have 19 Bcf per day of export capacity. This is pipelines + LNG export facilities. Today we export about 7 Bcfpd.